Armada Hoffler Properties, Inc.

Armada Hoffler Properties, Inc.
First Quarter 2014 Supplemental Information
Table of Contents
Forward Looking Statements
Corporate Profile
First Quarter Results and Financial Summary
Highlights
2014 Outlook
Summary Information
Summary Balance Sheet
Summary Income Statement
Core FFO & AFFO
Summary of Outstanding Debt
Debt to Core EBITDA
Debt Information
Portfolio Summary & Business Segment Overview
Stabilized Portfolio Summary
Stabilized Portfolio Summary Footnotes
Development Pipeline
Construction Business Summary
Operating Results & Property-Type Segment Analysis
Same Store NOI by Segment
Top 10 Tenants by Annual Base Rent
Office Lease Summary
Retail Lease Summary
Historical Occupancy
Appendix - Understanding AHH
Corporate Overview
Differentiation Provides Value Creation
Business Segmentation Overview
Components of NAV
Stabilized Portfolio
Identified & Next Generation Pipeline
3rd Party Construction
Net Asset Value Component Data
Appendix - Definitions & Reconciliations
Definitions
Reconciliations
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10
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15
16
17
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27
29
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31
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43
2
Forward Looking Statement
This Supplemental Information should be read in conjunction with our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014, and the unaudited consolidated financial statements appearing in our press
release dated May 13, 2014, which has been furnished as Exhibit 99.1 to our Form 8-K filed on May 13, 2014.
The Company makes statements in this Supplemental Information that are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)). In particular, statements pertaining to our capital resources, portfolio performance and
results of operations contain forward-looking statements. Likewise, all of our statements regarding anticipated
growth in our funds from operations, core funds from operations, adjusted funds from operations, funds
available for distribution and net operating income are forward-looking statements. You can identify forwardlooking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,”
“should,” “seeks,” “approximately,” “intends,” “plans,” “estimates” or “anticipates” or the negative of these
words and phrases or similar words or phrases which are predictions of or indicate future events or trends and
which do not relate solely to historical matters. You can also identify forward-looking statements by discussions
of strategy, plans or intentions.
Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as
predictions of future events. Forward-looking statements depend on assumptions, data or methods which may be
incorrect or imprecise and the Company may not be able to realize them. The Company does not guarantee that
the transactions and events described will happen as described (or that they will happen at all). For further
discussion of risk factors and other events that could impact our future results, please refer to the section
entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC), and the documents subsequently filed by us from time to time with the SEC.
3
Corporate Profile
Corporate Information
Armada Hoffler Properties, Inc. (NYSE: AHH) is a full service real estate investment trust company that develops, builds, owns and manages institutional
grade office, retail and multifamily properties in the Mid-Atlantic U.S. The Company also provides general construction and development services to thirdparty clients throughout the Mid-Atlantic and Southeastern regions of the U.S. Armada Hoffler Properties was founded in 1979 and is headquartered in
Virginia Beach, VA.
Management & Board
Board of Directors
Daniel A. Hoffler
A. Russell Kirk
Louis S. Haddad
John W. Snow
George F. Allen
James A. Carroll
James C. Cherry
Joseph W. Prueher
Executive Chairman of the Board
Vice Chairman of the Board
Director
Lead Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Corporate Officers
Louis S. Haddad
Anthony P. Nero
Shelly R. Hampton
Eric E. Apperson
Michael P. O’Hara
Eric L. Smith
President and Chief Executive Officer
President of Development
President of Asset Management
President of Construction
Chief Financial Officer and Treasurer
Vice President of Operations and Secretary
Analyst Coverage
Janney, Montgomery, & Scott LLC
Michael Gorman
(215) 665-6224
[email protected]
Raymond James & Associates
Richard Mulligan
(727) 567-2660
[email protected]
Robert W. Baird & Co.
David Rodgers
(216) 737-7341
[email protected]
Stifel, Nicolaus & Company, Inc.
John Guinee
(443) 224-1307
[email protected]
Wunderlich Securities
Craig Kucera
(540) 277-3366
[email protected]
Investor Relations Contact
Julie Loftus Trudell
Vice President of Investor Relations
(757) 366-6692
[email protected]
4
First Quarter Results and
Financial Summary
Highlights
Financial
•
Funds From Operations (“FFO”) of $6.5 million, or
$0.20 per diluted share.
•
Core FFO of $7.1 million, or $0.22 per diluted share.
•
Occupancy increased slightly to 94.5%, compared to
94.4% as of December 31, 2013.
•
Cash dividend of $0.16 per share payable on July 10,
2014 to stockholders of record on July 1, 2014.
•
Core debt to annualized Core EBITDA - 6.9x
•
Weighted average interest rate of 3.6% and average
loan term to maturity of 9.7 years
•
Approximately 46% of debt was fixed as of March 31st
but taking into account LIBOR interest rates caps
approximately 83% of debt was fixed or hedged.
Operational
•
Eleven properties under development including
675,000 square feet of office and retail space and
686 multifamily units.
•
$165.9 million of new construction contract work,
including the Harbor Point project in Baltimore,
Maryland, and $193.3 million of backlog.
•
Anthropologie will be opening a 9,000 square foot
store at the Town Center of Virginia Beach in the
fourth quarter of 2014.
•
Today, the Company announced two new
development projects, both with the Commonwealth
of Virginia, for a total of 47,000 square feet. Both
properties will be 100% leased for 12 years starting
in early 2015.
•
In April, the Company announced Lightfoot
Marketplace, a new shopping center in Williamsburg,
Virginia that will be anchored by Harris Teeter on a
20-year lease.
6
2014 Outlook
Total Core FFO
(excluding the impact from non-stabilized projects)
Current Parameters
Previous Parameters
As of May 13, 2014
As of February 20, 2014
In-line with full-year 2013 FFO
In-line with full-year 2013 FFO
Non-stabilized projects - negative impact to FFO
(excluded from Core FFO)
Approximately $1.5 million
Approximately $1.5 million
General & administrative expense
Approximately $7.8 million
Approximately $7.8 million
Third party construction company annual segment
gross profit
Approximately $4.0 million
Approximately $4.0 million
7
Summary Information
$ in thousands, except per share
Market Capitalization
Key Financials
3/31/2014
% of Total
Equity
Market Data
Total Common Shares Outstanding
Operating Partnership ("OP") Units Outstanding
Common shares and OP units outstanding
Market price per common share
Equity market capitalization
Total debt
Total market capitalization
Less: cash
Total enterprise value
58%
42%
100%
Total Market
Capitalization
19,254,365
13,785,017
33,039,382
$10.04
$331,715
317,271
$648,986
(16,198)
$632,788
Rental revenues
General contracting and real estate services revenues
Rental properties Net Operating Income (NOI)
General contracting and real estate services gross profit
Net income
Funds From Operations (FFO)
FFO per diluted share
Core FFO
Core FFO per diluted share
Weighted Average Shares/Units Outstanding
Stable Portfolio Metrics
Multifamily (1)
32,824,399
Three months ended
3/31/2014
950,370
1,092,311
626
Occupancy:
Key Metrics
Core debt/enterprise value
Fixed charge coverage ratio
Core EBITDA
Interest
Office (2)
95.4%
Principal
Retail (2)
93.4%
Total Fixed Charges
Multifamily(1)(3)
94.2%
Fixed charge coverage ratio
Weighted Average (4)
$15,193
19,234
9,874
1,249
2,506
6,475
$0.20
7,065
$0.22
Debt Metrics
3/31/2014
Rentable square feet or number of units:
Office
Retail
Three months ended
3/31/2014
Financial Information:
42.5%
$9,686
2,565
714
3,279
2.95x
94.5%
Core Debt/Annualized Core EBITDA
(1) Excludes Liberty Apartments
(2) Office and retail occupancy based on leased square feet as a % of respective total
(3) Multifamily occupancy based on occupied units as a % of respective total
(4) Total occupancy weighted by annualized base rent
6.9x
8
Summary Balance Sheet
$ in thousands
As of
Assets
Real estate investments:
Income producing property
Construction in progress
3/31/2014
(Unaudited)
12/31/2013
$434,281
78,536
512,817
(108,706)
404,111
$406,239
56,737
462,976
(105,228)
357,748
Cash and cash equivalents
Restricted cash
Accounts receivable, net
Construction receivables, including retentions
Costs and estimated earnings in excess of billings
Other assets
Total Assets
13,444
2,754
18,884
12,736
1,184
25,799
$478,912
18,882
2,160
18,272
12,633
1,178
24,409
$435,282
Liabilities and Equity
Indebtedness
Accounts payable and accrued liabilities
Construction payables, including retentions
Billings in excess of costs and estimated earnings
Other liabilities
Total Liabilities
$317,271
7,158
27,047
1,134
16,264
368,874
$277,745
6,463
28,139
1,541
15,873
329,761
110,038
105,521
$478,912
$435,282
Accumulated depreciation
Net real estate investments
Total Equity
Total Liabilities and Equity
9
Summary Income Statement
$ in thousands
Revenues
Rental revenues
General contracting and real estate services
Total Revenues
Expenses
Rental expenses
Real estate taxes
General contracting and real estate services
Depreciation and amortization
General and administrative
Total Expenses
Operating Income
Interest expense
Other income
Income before taxes
Income tax provision
Net income
Three months ended
3/31/2014
3/31/2013
(Unaudited)
$15,193
$13,398
19,234
17,956
34,427
31,354
3,976
1,343
17,985
3,969
2,046
29,319
3,229
1,212
17,458
3,159
717
25,775
5,108
5,579
(2,565)
112
2,655
(149)
$2,506
(3,915)
267
1,931
$1,931
10
Core FFO & AFFO
$ in thousands, except per share
Three months ended
3/31/2014
(Unaudited)
$2,506
3,969
6,475
Net income
Depreciation and amortization
FFO
Core FFO
Adjustments
Loss on extinguishment of debt
Non-cash stock compensation
Impairment charges
Loan modifications
Non-Stabilized development pipeline adjustments
Core FFO
Core FFO per weighted average share
329
261
7,065
$0.22
AFFO
Adjustments
Non-Stabilized development pipeline adjustments
(1)
Tenant improvements, leasing commissions
Leasing incentives
Property related capital expenditures
Non cash interest expense
GAAP Adjustments
Net effect of straight-line rents
Amortization of lease incentives and above (below) market rents
Derivative (income) losses
AFFO
AFFO per weighted average share
(261)
(209)
(219)
133
(389)
160
(93)
$6,187
$0.19
(1) Excludes tenant improvements and leasing commissions on first generation rental space.
11
Summary of Outstanding Debt
$ in thousands
Debt
Virginia Beach Town Center
249 Central Park Retail
South Retail
Studio 56 Retail
Commerce Street Retail
Fountain Plaza Retail
Dick's at Town Center
The Cosmopolitan
Diversified Portfolio
Oyster Point
Broad Creek Shopping Center
Note 1
Note 2
Note 3
Hanbury Village
Note 1
Note 2
Harrisonburg Regal
North Point Center
Note 1
Note 2
Note 4
Note 5
Tyre Neck Harris Teeter
Smith's Landing
Credit Facility
Total including Credit Facility
Development Pipeline
4525 Main Street
Amount
Outstanding
Interest Rate (1)
Effective Rate as of
March 31, 2014
$15,765
6,955
2,672
5,597
7,883
8,292
47,577
5.99%
5.99%
3.75%
LIBOR +2.25%
5.99%
LIBOR+2.75%
3.75%
6,418
5.41%
4,490
8,244
3,451
LIBOR +2.25%
LIBOR +2.25%
LIBOR +2.25%
21,388
4,142
3,797
6.67%
LIBOR +2.25%
6.06%
10,277
2,817
1,024
6.45%
7.25%
5.59%
700
2,471
LIBOR+2.00%
LIBOR +2.25%
3.57%
2.41%
24,714
188,674
LIBOR+2.15%
80,000
LIBOR + 1.60% - 2.20%
Maturity Date
Balance at
Maturity
September 8, 2016
September 8, 2016
May 7, 2015
October 31, 2018
September 8, 2016
October 31, 2017
July 1, 2051
$15,084
6,655
2,592
5,264
7,542
7,889
-
December 1, 2015
6,089
2.41%
2.41%
2.41%
October 31, 2018
October 31, 2018
October 31, 2018
4,223
7,752
3,246
2.41%
October 11, 2017
October 31, 2018
June 8, 2017
20,499
3,777
3,165
February 5, 2019
September 15, 2025
December 1, 2014
9,333
1,344
1,007
February 1, 2017
October 31, 2018
641
2,235
2.31%
January 31, 2017
23,793
132,130
1.90%
May 13, 2016
2.41%
2.91%
(2)
$268,674
80,000
$212,130
17,483
LIBOR+1.95%
2.11%
January 30, 2017
17,483
Encore Apartments
9,279
LIBOR+1.95%
2.11%
January 30, 2017
9,279
Whetstone Apartments
1,425
LIBOR+1.90%
2.06%
October 8, 2016
1,425
Sandbridge Commons
3,437
LIBOR+1.85%
2.01%
January 17, 2018
3,437
November 1, 2043
-
Liberty Apartments
Oceaneering
Total Notes Payable - Development Pipeline
Unamortized fair value adjustments
Total Notes Payable
18,456
-
(3)
5.66%
LIBOR+1.75%
1.91%
February 28, 2018
50,080
(1,483)
$317,271
$243,754
Weighted Average Fixed Interest Rate
Weighted Average Variable Interest Rate
Total Weighted Average Interest Rate
Variable Interest Rate as a % of Total (excluding interest rate caps)
Weighted Average Maturity (years)
(1) LIBOR rate is determined by individual lenders.
(2) Subject to an interest rate swap lock.
(3) Principal balance excluding any fair value adjustment recognized upon acquisition.
31,624
Capitalized Interest
5.3%
2.1%
3.6%
54.1%
9.7
1Q 2014
$616
12
Core Debt to Core EBITDA
$ in thousands
Three months
ended 3/31/2014
(Unaudited)
Net Income
Excluding:
Interest Expense
Income Tax
Depreciation and amortization
EBITDA
Additional Adjustments:
Non-recurring or extraordinary (gains) losses
Early extinguishment of debt
Derivative (income) losses
Non-cash stock compensation
Development Pipeline
Total Other Adjustments
Core EBITDA
Annualized Core EBITDA
$2,506
2,565
149
3,969
9,189
(93)
329
261
497
3/31/2014
(Unaudited)
Total Debt
Excluding:
Development Pipeline Unstabilized Debt
Core Debt
Core Debt/Annualized Core EBITDA
$317,271
(48,597)
$268,674
6.9x
9,686
$38,744
13
Debt Information
$ in thousands
Debt Maturity as of 3/31/2014
$120,000
$100,000
($ in thousands)
$80,000
$60,000
$40,000
$20,000
$0
2014
2015
2016
2017
2018 and
thereafter
Interest Rate Cap Agreements At or Below 1.50%
Effective Date
May 31, 2012
September 1, 2013
October 4, 2013
March 14, 2014
Maturity Date
May 29, 2015
March 1, 2016
April 1, 2016
March 1, 2017
Strike Rate
1.09%
1.50%
1.50%
1.25%
Notional Amount
$9,068
40,000
18,500
50,000
Total Interest Rate Caps at or Below 11.50%
$117,568
Fixed Debt Outstanding
Total Fixed Interest Rate Debt (including caps)
Fixed Interest Rate Debt as a % of Total
145,729
$263,297
83%
14
Portfolio Summary & Business
Segmentation Overview
Stabilized Portfolio Summary
As of 3/31/2014
Net Rentable
Property
Location
Year Built
Square Feet
Annualized
(1)
% Leased
(2)
Base Rent
(3)
Annualized
Base Rent per
Average Net
Effective
Annual Base
Rent per
Leased Sq. Ft.(3)
Leased Sq. Ft.(4)
Office Properties
Armada Hoffler Tower (5)
One Columbus
Two Columbus
Virginia Beach, VA
Virginia Beach, VA
Virginia Beach, VA
2002
1984
2009
324,348
129,424
109,215
98.2%
97.4%
90.7%
$8,605,343
2,938,383
2,509,410
$27.01
23.30
25.33
$26.51
23.62
27.01
Virginia Natural Gas (6)
Richmond Tower
Oyster Point
Virginia Beach, VA
Richmond, VA
Newport News, VA
2010
2010
1989
31,000
206,969
100,214
100.0%
98.0%
79.8%
568,230
7,376,131
1,742,296
18.33
36.37
21.78
20.17
41.88
21.27
Sentara Williamsburg(6)
Williamsburg, VA
2008
49,200
100.0%
1,006,140
20.45
20.50
950,370
95.4%
$24,745,933
$27.29
$28.60
2001
1997-2001
2011
1999
2006-2009
1998-2009
1998
1999
2002
111,566
227,691
3,177
88,862
61,049
215,690
37,804
49,000
100,804
94.0%
96.8%
100.0%
96.5%
86.4%
92.1%
95.2%
100.0%
83.3%
1,409,089
3,074,931
125,000
1,353,202
1,296,542
2,348,731
702,488
683,550
798,000
13.44
13.95
39.35
15.77
24.59
11.82
19.51
13.95
9.50
13.63
12.75
43.81
15.97
24.41
11.63
20.61
13.95
7.79
Subtotal / Weighted Average Office Portfolio (7)
Retail Properties Not Subject to Ground Lease
Bermuda Crossroads
Broad Creek Shopping Center
Courthouse 7-Eleven
Gainsborough Square
Hanbury Village
North Point Center
Parkway Marketplace
Harrisonburg Regal
Dick's at Town Center
Chester, VA
Norfolk, VA
Virginia Beach, VA
Chesapeake, VA
Chesapeake, VA
Durham, NC
Virginia Beach, VA
Harrisonburg, VA
Virginia Beach, VA
249 Central Park Retail
Studio 56 Retail
Virginia Beach, VA(8)
Virginia Beach, VA
2004
2007
91,171
11,600
96.2%
84.8%
2,447,620
371,200
27.92
37.75
27.58
19.03
Commerce Street Retail (9)
Fountain Plaza Retail
Virginia Beach, VA
Virginia Beach, VA
2008
2004
19,173
35,961
100.0%
100.0%
797,090
996,181
41.57
27.70
36.92
39.48
Virginia Beach, VA
2002
38,763
83.6%
621,240
19.17
25.18
1,092,311
93.4%
$17,024,862
$16.70
$16.65
163,350
South Retail
(24)
Subtotal / Weighted Avg Retail Portfolio not Subject to Ground Leases (10)
Retail Properties Subject to Ground Lease
Bermuda Crossroads (11)
Chester, VA
2001
(13)
100.0%
Broad Creek Shopping Center (12)
Norfolk, VA
1997-2001
(14)
100.0%
579,188
Hanbury Village(11)
Chesapeake, VA
2006-2009
(15)
100.0%
1,067,598
1998-2009
(16)
100.0%
1,055,125
2011
(17)
100.0%
100.0%
508,134
$3,373,396
93.4%
$20,398,257
$16.70
$16.65
94.3%
$45,144,190
$21.68
$22.27
North Point Center
(11)
Durham, NC
Tyre Neck Harris Teeter (12)
Portsmouth, VA
Subtotal / Weighted Avg Retail Portfolio Subject to Ground Leases
Total / Weighted Avg Retail Portfolio
1,092,311
Total / Weighted Average Retail and Office Portfolio
2,042,681
Property
Multifamily
Location
Smith's Landing(22)
The Cosmopolitan
Total / Weighted Avg Multifamily Portfolio
Blacksburg, VA
Virginia Beach, VA
Year Built
2009
2006
Units(19)
284
342
626
(18)
% Leased(2)
99.6%
89.8%
94.2%
Annualized
Average
Monthly Base
Rent per
Base Rent (20)
Leased Unit (21)
$3,430,260
6,735,707
$10,165,967
$1,010.09
1,574.26
$1,303.65
16
Stabilized Portfolio Summary Footnotes
1)The net rentable square footage for each of our office properties is the sum of (a) the square footages of existing leases, plus (b) for available space, management’s estimate of net rentable square footage
based, in part, on past leases. The net rentable square footage included in office leases is generally determined consistently with the Building Owners and Managers Association, or BOMA, 1996
measurement guidelines. The net rentable square footage for each of our retail properties is the sum of (a) the square footages of existing leases, plus (b) for available space, the field verified square
footage.
2)Percentage leased for each of our office and retail properties is calculated as (a) square footage under executed leases as of March 31, 2014, divided by (b) net rentable square feet, expressed as a
percentage. Percentage leased for our multifamily properties is calculated as (a) total units occupied as of March 31, 2014, divided by (b) total units available, expressed as a percentage.
3)For the properties in our office and retail portfolios, annualized base rent is calculated by multiplying (a) base rental payments for executed leases as of March 31, 2014 (defined as cash base rents (before
abatements) excluding tenant reimbursements for expenses paid by the landlord), by (b) 12. Annualized base rent per leased square foot is calculated by dividing (a) annualized base rent, by (b) square
footage under commenced leases as of March 31, 2014. In the case of triple net or modified gross leases, annualized base rent does not include tenant reimbursements for real estate taxes, insurance,
common area or other operating expenses.
4)Average net effective annual base rent per leased square foot represents (a) the contractual base rent for leases in place as of March 31, 2014, calculated on a straight-line basis to amortize free rent periods
and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (b) square footage under commenced leases as of March 31, 2014.
5)As of March 31, 2014, the Company occupied 16,151 square feet at this property at an annualized base rent of $446,172, or $29.40 per leased square foot, which amounts are reflected in the % leased,
annualized base rent and annualized base rent per square foot columns in the table above. The rent paid by us is eliminated from our revenues in consolidation. In addition, effective March 1, 2013, the
Company sublease approximately 5,000 square feet of space from a tenant at this property.
6)This property is subject to a triple net lease pursuant to which the tenant pays operating expenses, insurance and real estate taxes.
7)Includes square footage and annualized base rent pursuant to leases for space occupied by us.
8)As of March 31, 2014, the Company occupied 8,995 square feet at this property at an annualized base rent of $278,965, or $31.01 per leased square foot, which amounts are reflected in the % leased,
annualized base rent and annualized base rent per square foot columns in the table above. The rent paid by us is eliminated from our revenues in consolidation.
9)Includes $31,200 of annualized base rent pursuant to a rooftop lease.
10)Reflects square footage and annualized base rent pursuant to leases for space occupied by AHH.
11)For this ground lease, the Company own the land and the tenant owns the improvements thereto. The Company will succeed to the ownership of the improvements to the land upon the termination of the
ground lease.
12)The Company lease the land underlying this property from the owner of the land pursuant to a ground lease. The Company re-lease the land to our tenant under a separate ground lease pursuant to which
our tenant owns the improvements on the land.
13)Tenants collectively lease approximately 139,356 square feet of land from us pursuant to ground leases.
14)Tenants collectively lease approximately 299,170 square feet of land from us pursuant to ground leases.
15)Tenants collectively lease approximately 105,988 square feet of land from us pursuant to ground leases.
16)Tenants collectively lease approximately 1,443,985 square feet of land from us pursuant to ground leases.
17)Tenant leases approximately 200,073 square feet of land from us pursuant to a ground lease.
18)The total square footage of our retail portfolio excludes the square footage of land subject to ground leases.
19)Units represent the total number of apartment units available for rent at March 31, 2014.
20)For the properties in our multifamily portfolio, annualized base rent is calculated by multiplying (a) base rental payments for the month ended March 31, 2014 by (b) 12.
21)Average monthly base rent per leased unit represents the average monthly rent for all leased units for the month ended March 31, 2014.
22)The Company lease the land underlying this property from the owner of the land pursuant to a ground lease.
23)The annualized base rent for The Cosmopolitan includes $936,143 of annualized rent from 15 retail leases at the property.
24)As of March 31, 2014, The Company occupied 2,908 square feet at this property at an annualized base rent of $12,000, or $4.13 per leased square foot, which amounts are reflected in the % leased,
annualized base rent and annualized base rent per square foot columns in the table above. The rent paid by us and is eliminated from our revenues in consolidation.
17
Development Pipeline
$ in thousands
Identified Development Pipeline
Schedule
Estimated
Square
Cost(1)
$50,000
Cost Incurred
through
3/31/2014
$32,000
Start
1Q13
Anchor Tenant
Occupancy
3Q14
Stabilized
Operation
1Q16
Ownership % (1)
100%
Property Type
Office
%leased
46%
Anchor Tenants
Clark Nexsen, Development Authority
100%
Retail
66%
of Virginia Beach(3), Anthropology (8)
Harris Teeter
Estimated
AHH
4525 Main Street(2)
Location
Virginia Beach, VA
Footage(1)
234,000
Sandbridge Commons
Virginia Beach, VA
70,000
13,000
6,000
4Q13
1Q15
2Q16
Brooks Crossing
Newport News, VA
36,000
8,000
1,200
3Q14
3Q15
3Q15
65%
Office
0%
Greentree Shopping Center (5)
Chesapeake, VA
18,000
358,000
6,000
77,000
3,000
42,200
4Q13
4Q14
3Q16
100%
Retail
40%
Office/Retail
(3)
Huntington Ingalls (4)
Wawa
Schedule
Estimated
Apartment
Multifamily
Encore Apartments (2)
Whetstone Apartments
Liberty Apartments (6)
Units (1)
286
Cost(1)
$34,000
Cost Incurred
through
3/31/2014
$17,000
Durham, NC
203
28,000
13,000
2Q13
3Q14
3Q15
1Q16
100%
Newport News, VA
197
30,700
30,700
-
-
1Q14
3Q15
100%
686
92,700
60,700
Location
Virginia Beach, VA
Estimated
Start
1Q13
Initial
Occupancy
3Q14
Complete(1)
4Q15
Stabilized
Operation
1Q16
Next Generation Pipeline
AHH
Ownership %
100%
Schedule
Estimated
Square
Footage(1)
155,000
Cost(1)
$26,000
Cost Incurred
through
3/31/2014
$6,000
Chesapeake, VA
36,000
7,000
200
2Q14
1Q15
1Q15
100%
Office
100%
Commonwealth of Virginia
Virginia Beach, VA
11,000
3,000
-
2Q14
1Q15
1Q15
100%
Office
100%
Commonwealth of Virginia
Williamsburg, VA
88,000
24,000
500
3Q14
1Q16
2Q17
70%(7)
Retail
60%
Harris Teeter
290,000
60,000
6,700
$229,700
$109,600
Office/Retail
Oceaneering
Location
Chesapeake, VA
Commonwealth of Virginia - Chesapeake
Commonwealth of Virginia - Virginia Beach
Lightfoot Marketplace
Total
Estimated
AHH
Start
4Q13
Anchor Tenant
Occupancy
1Q15
Stabilized
Operation
1Q15
Ownership % (1)
100%
Property Type
Office
%leased
100%
Anchor Tenants
Oceaneering
(1) Represents estimates that may change as the development process proceeds
(2) This property will be located within the Virginia Beach Town Center
(3) Approximately 83,000 square feet is leased to Clark Nexsen, an architectural firm and
approximately 23,000 square feet is leased to the Development Authority of Virginia Beach
(4) The principal tenant lease has not been signed as of the date of this supplemental information
(5) AHH has completed the sale of a pad ready site to Wal-Mart adjacent to Greentree Shopping Center
(6) Reflects purchase price of the acquisition, which occurred in 1Q14
(7) AHH earns a preferred return on equity prior to any distributions to JV partners
(8) Executed lease with retail anchor
18
Construction Business Summary
$ in thousands
Location
Total Contract
Value
Work in Place as
of 3/31/2014
Backlog
Estimated Date
of Completion
Projects Greater than $5.0M
Exelon
Baltimore, MD
$164,662
$3,634
$161,028
1Q 2016
Hyatt Place Baltimore / Inner Harbor Hotel
Baltimore, MD
24,943
6,470
18,473
3Q 2014
City of Suffolk Municipal Center
Suffolk, VA
24,708
17,995
6,713
2Q 2015
Main Street Parking Garage(1)
Virginia Beach, VA
17,780
15,319
2,461
3Q 2014
232,094
43,418
188,675
81,409
76,767
4,643
$313,503
$120,185
$193,318
Sub Total
Projects Less than $5.0M
Total
Gross Profit Summary
Q1 2014
(Unaudited)
Revenue
Expense
Gross Profit
$19,234
(17,985)
$1,249
(1) Related party contracts
19
Operating Results & PropertyType Segment Analysis
Same Store NOI by Segment
(Reconciliation to GAAP located in appendix pg. 43)
$ in thousands
Three months ended 3/31
2014
2013
Office (1)
Revenue
Expenses
Net Operating Income
(Unaudited)
$6,549
2,131
4,418
$ Change % Change
$6,486
1,946
4,540
$63
185
(122)
1%
10%
-3%
4%
0%
6%
Retail(2)
Revenue
Expenses
Net Operating Income
5,228
1,687
3,541
5,005
1,680
3,325
223
7
216
Multi Family(3)
Revenue
Expenses
Net Operating Income
1,816
831
985
1,907
815
1,092
(91)
16
(107)
-5%
2%
-10%
Same Store Net Operating Income (NOI), GAAP basis
$8,944
$8,957
($13)
0%
Net effect of straight-line rents
Amortization of lease incentives and above (below) market rents
Same store portfolio NOI, cash basis
(387)
186
$8,743
(215)
196
$8,938
(172)
(10)
($195)
80%
-5%
-2%
3,925
3,830
988
$8,743
4,209
3,631
1,098
$8,938
(284)
199
(110)
($195)
-7%
5%
-10%
-2%
4,418
3,541
985
$8,944
4,540
3,325
1,092
$8,957
(122)
216
(107)
($13)
-3%
6%
-10%
0%
Cash Basis:
Office
Retail
Multifamily
GAAP Basis:
Office
Retail
Multifamily
(1) No assets excluded
(2) Bermuda Crossroads excluded
(3) Smith's Landing and Liberty Apartments excluded
21
Top 10 Tenants by Annual Base Rent
As of March 31, 2014
Office Portfolio
Tenant
Williams Mullen
Sentara Medical Group
Troutman Sanders LLP
Cherry Bekaert & Holland
GSA
Pender & Coward
The Art Institute
Kimley- Horn
Hampton University
Hankins & Anderson
Number
of Leases
3
1
1
3
1
2
1
1
2
1
Number
of
Properties
2
1
1
3
1
1
1
1
1
1
Property(ies)
Armada Hoffler Tower, Richmond Tower
Sentara Williamsburg
Armada Hoffler Tower
Armada Hoffler Tower, Richmond Tower, Oyster Point
Oyster Point
Armada Hoffler Tower
Two Columbus
Two Columbus
Armada Hoffler Tower
Armada Hoffler Tower
Annualized
Base Rent
$7,374,020
1,006,140
990,151
942,900
870,047
818,985
787,226
685,863
629,935
572,601
% of Office
Portfolio
Annualized
Base Rent
29.8%
4.1%
4.0%
3.8%
3.5%
3.3%
3.2%
2.8%
2.5%
2.3%
% of Total
Portfolio
Annualized
Base Rent
13.3%
1.8%
1.8%
1.7%
1.6%
1.5%
1.4%
1.2%
1.1%
1.0%
$14,677,867
59.3%
26.5%
Lease
Expiration
12/3/2019
10/16/2028
3/19/2020
Annualized
Base Rent
$2,032,600
1,430,001
1,282,568
% of Retail
Portfolio
Annualized
Base Rent
10.0%
7.0%
6.3%
% of Total
Portfolio
Annualized
Base Rent
3.7%
2.6%
2.3%
1/31/2020
4/23/2019
7/21/2018
8/31/2018
11/30/2023
5/29/2019
12/31/2083
798,000
683,550
618,704
552,864
538,000
484,193
447,564
3.9%
3.4%
3.0%
2.7%
2.6%
2.4%
2.2%
1.4%
1.2%
1.1%
1.0%
1.0%
0.9%
0.8%
$8,868,044
43.5%
16.0%
Lease
Expiration
3/19/2026
3/31/2023
8/24/2022
9/20/2022
4/26/2017
5/31/2030
12/31/2019
12/31/2018
5/3/2023
4/30/2022
Top 10 Total
Retail Portfolio
Tenant
Home Depot
Harris Teeter
Food Lion
Dick's Sporting Goods
Regal Cinemas
PetsMart
Kroger
Yard House
Rite Aid
Walgreens
Top 10 Total
Number
of Leases
2
2
3
1
1
2
1
1
2
1
Number
of
Properties
Property(ies)
2
Broad Creek Shopping Center, North Point Center
2
Tyre Neck Harris Teeter, Hanbury Village
3
Broad Creek Shopping Center, Bermuda Crossroads,
Gainsborough Square
1
Dick's at Town Center
1
Harrisonburg Regal
2
Broad Creek Shopping Center, North Point Center
1
North Point Center
1
Commerce Street Retail
2
Gainsborough Square, Parkway Marketplace
1
Hanbury Village
22
Office Lease Summary
Renewal Lease Summary(1)
Quarter
1st Quarter 2014
4th Quarter 2013
3rd Quarter 2013
2nd Quarter 2013
GAAP
Number of
Leases
Signed
1
5
5
6
Net rentable
SF Signed
25,506
45,677
16,289
29,725
Leases
Expiring
Number of
Leases
Signed
2
4
1
2
Net rentable
SF Signed
5,430
18,381
1,142
4,046
2
4
4
4
Net rentable
SF Expiring
5,430
5,112
30,038
16,635
Contractual
Rent per SF
$32.28
26.74
29.18
22.86
Prior Rent
per SF
$26.66
25.27
26.76
23.14
Contractual
Rent per SF
$24.12
23.56
29.50
26.77
Weighted
Average
Lease Term
1.00
10.34
5.00
5.00
TI, LC, &
Incentives
$5,239
577,382
3,577
165,628
TI, LC, &
Incentives
per SF
$0.96
31.41
3.13
40.94
Cash
Annual
Change in
Rent per SF
$5.63
1.47
2.42
(0.28)
Contractual
Rent per SF
$29.95
23.58
28.26
21.81
Prior Rent
per SF
$29.25
27.97
27.92
24.20
Annual Change
in Rent per SF
$0.70
(4.39)
0.33
(2.39)
Weighted
Average Lease
Term
10.00
11.34
6.79
5.68
TI, LC, &
Incentives
$1,315,127
1,927,309
60,809
481,389
TI, LC, &
Incentives
per SF
$51.56
42.19
3.73
16.19
New Lease Summary(1)
Quarter
1st Quarter 2014
4th Quarter 2013
3rd Quarter 2013
2nd Quarter 2013
(1) Excludes leases for space occupied by AHH.
23
Office Lease Expirations
Number of
Leases
Expiring
10
11
10
5
16
6
3
4
4
4
7
80
Year of Lease Expiration
Available
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Thereafter
Total / Weighted Average
Square
Footage of
Leases
Expiring
43,596
45,776
35,957
33,481
65,186
156,166
71,512
25,283
41,363
81,129
105,160
245,761
950,370
% Portfolio
Net Rentable
Square Feet
4.6%
4.8%
3.8%
3.5%
6.9%
16.4%
7.5%
2.7%
4.4%
8.5%
11.1%
25.9%
100.0%
Annualized
Base Rent
$0
1,277,380
792,098
792,784
1,572,403
4,211,488
1,641,580
772,781
946,930
2,270,814
2,319,039
8,148,637
$ 24,745,933
% of Portfolio
Annualized
Base Rent
5.2%
3.2%
3.2%
6.4%
17.0%
6.6%
3.1%
3.8%
9.2%
9.4%
32.9%
100.0%
Annualized Base Rent
per Leased Square
Foot
$0.00
27.91
22.03
23.68
24.12
26.97
22.96
30.57
22.89
27.99
22.05
33.16
$27.29
32.9%
35.0%
30.0%
25.0%
20.0%
17.0%
15.0%
9.2%
10.0%
5.2%
5.0%
6.4%
3.2%
3.2%
9.4%
6.6%
3.1%
3.8%
0.0%
24
Retail Lease Summary
Renewal Lease Summary(1)
Number of
Leases
Quarter
Signed
1st Quarter 2014
5
4th Quarter 2013
7
3rd Quarter 2013
6
2nd Quarter 2013
6
GAAP
Net rentable
SF Signed
23,857
37,733
24,506
26,345
Leases
Expiring
3
6
3
3
Net
rentable SF
Expiring
6,540
7,928
3,648
7,728
Net rentable
SF Signed
3,160
3,270
20,037
Contractual
Rent per SF
$16.25
18.67
11.59
Weighted
Average
Lease Term
$10.50
5.06
5.34
Contractual
Rent per SF
$20.84
13.82
24.26
17.02
Prior Rent
per SF
$20.41
13.49
25.11
17.40
TI, LC, &
Incentives
$126,558
75,884
433,101
TI, LC, &
Incentives
per SF
$40.05
23.21
21.62
Cash
Annual Change
in Rent per SF
$0.43
0.33
(0.85)
(0.37)
Contractual
Rent per SF
$21.18
13.79
23.55
16.50
Prior Rent
per SF
$21.82
14.12
28.34
18.03
Annual Change
in Rent per SF
($0.64)
(0.33)
(4.79)
(1.53)
Weighted
Average Lease
Term
4.55
4.70
5.67
4.12
TI, LC, &
Incentives
$63,339
40,540
227,766
-
TI, LC, &
Incentives
per SF
$2.65
1.07
9.29
-
New Lease Summary(1)
Quarter
1st Quarter 2014
4th Quarter 2013
3rd Quarter 2013
2nd Quarter 2013
Number of
Leases
Signed
1
2
6
(1) Excludes leases from space occupied by AHH
25
Retail Lease Expiration
Number of
Leases
Expiring
14
19
21
21
19
17
6
5
5
5
7
139
Year of Lease Expiration
Available
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Thereafter
Total / Weighted Average
Square
Footage of
Leases
Expiring
72,603
23,711
65,030
61,469
139,345
120,295
299,541
132,094
25,204
79,588
27,625
45,806
1,092,311
% Portfolio
Net Rentable
Square Feet
6.6%
2.2%
6.0%
5.6%
12.8%
11.0%
27.4%
12.1%
2.3%
7.3%
2.5%
4.2%
100.0%
Annualized
Base Rent
$0
418,056
1,357,952
1,442,928
1,970,406
1,736,312
4,303,255
1,647,180
740,832
1,151,218
869,930
1,386,792
$ 17,024,862
% of Portfolio
Annualized
Base Rent
2.5%
8.0%
8.5%
11.6%
10.2%
25.3%
9.7%
4.4%
6.8%
5.1%
8.1%
100.0%
Annualized Base Rent
per Leased Square
Foot
$0.00
17.63
20.88
23.47
14.14
14.43
14.37
12.47
29.39
14.46
31.49
30.28
$16.70
30.0%
25.3%
25.0%
20.0%
15.0%
11.6%
10.0%
5.0%
8.0%
2.5%
8.5%
10.2%
9.7%
6.8%
4.4%
8.1%
5.1%
0.0%
26
Historical Occupancy
Sector
3/31/2014
Occupancy - All Properties as of
12/31/2013
9/30/2013
6/30/2013
3/31/2013
(1)
95.4%
95.2%
93.4%
93.4%
93.9%
Retail (1)
93.4%
93.4%
93.6%
94.6%
93.9%
Multifamily(2)
94.2%
94.2%
92.7%
91.2%
93.3%
Weighted Average(3)
94.5%
94.4%
93.3%
93.5%
93.8%
Office
(1) Office and retail occupancy based on leased square feet as a % of respective total
(2) Multifamily occupancy based on occupied units as a % of respective total
(3) Total occupancy weighted by annualized base rent
27
Multifamily Occupancy
Occupancy Summary - Smiths Landing (284 available units)
Percentage
Number of Units
Quarter Ended
3/31/2014
12/31/2013
9/30/2013
6/30/2013
3/31/2013
Occupied
Occupied
283
282
284
264
284
(1)
99.6%
99.3%
100.0%
93.0%
100.0%
Occupancy Summary - The Cosmopolitan (342 available units)
Percentage
Number of Units
Quarter Ended
3/31/2014
12/31/2013
9/30/2013
6/30/2013
3/31/2013
Occupied
307
308
296
307
300
Occupied(1)
89.8%
90.1%
86.5%
89.9%
87.7%
Annualized Base
(2)
Rent
$3,430,260
3,382,380
3,427,980
3,163,164
3,395,184
Annualized Base
Rent(2)(4)
$5,799,564
5,721,144
5,506,764
5,818,908
5,490,864
Average Monthly Rent
per Occupied Unit
$1,010
1,000
1,006
998
996
Average Monthly Rent
per Occupied Unit(3)
$1,574
1,548
1,550
1,580
1,525
(1) Total units occupied as of each respective date
(2) Annualized base rent is calculated by multiplying (a) contractual rent due from our tenants for the last month of the respective quarter by (b) 12
(3) Average Monthly Rent per Occupied Unit is calculated as (a) annualized base rent divided by (b) the number of occupied units as of the end of the respective date.
(4) Excludes annualized base rent from retail leases
28
Appendix - Understanding AHH
Understanding AHH – Corporate Overview
Armada Hoffler Properties, Inc. is a full-service real estate investment trust (REIT) and property company that
develops, builds, owns and manages institutional grade office, retail and multifamily properties in the MidAtlantic U.S. The Company also provides general construction and development services to third-party clients
throughout the Mid-Atlantic and Southeastern regions of the U.S. Armada Hoffler Properties was founded in
1979 and is headquartered in Virginia Beach, VA.

Diversified portfolio consisting of Office, Retail
and Multifamily properties

Institutional grade portfolio focused on the MidAtlantic region

35 year corporate track record with senior
leadership team averaging more than 20 years
with the company

Market Cap of ~$330 million as of 3/31/14

Management and previous partners own in
Current Portfolio & Development Pipeline
excess of 40% of the company through limited
Previous Construction or Development Projects
partnership units in the operating partnership
30
Understanding AHH –
Differentiation Provides Value Creation
1.
2.
3.
Advantages of Core Stabilized Portfolio:
−
Consistent cash flow
−
High occupancy
−
Stable same store metrics
Development Engine
Advantages of Wholesale Development Pipeline Engine:
−
Equity creation
−
Asset base growth
Stable
Portfolio
Construction
Business
Advantages of Construction Company:
−
Stable earnings and value creation
−
Reduces risk in selecting/executing development opportunities
−
Brand recognition in new markets
Sum of the Parts Leads to Valuation
31
Business Segmentation Overview
Definition
Characteristics
Valuation
Stabilized
Portfolio
• Includes stabilized
office, retail, and
multifamily real estate
(defined as the earlier of
80% occupancy or the
13th full quarter after
CO)
• Consistent cash flow
• High occupancy
• Stable same store
metrics
Development
Pipeline
• Real estate assets in
development or ramping
towards stabilization
• Value creation
• Asset base growth
• Equity Creation
• 3rd party construction
business
• Stable earnings and
value creation
• Reduces risk in
selecting/executing
development
opportunities
• Brand recognition in
new markets
• Multiples analysis
Construction
Business
• Traditional real estate
valuation, NAV/Cap
Rates
32
Components of NAV
See Pages 34-37 for Further Information Regarding the Components of NAV
33
1) Understanding AHH –Stabilized Portfolio
(Reconciliation to GAAP located in appendix pg. 44)
$ in thousands
Cash NOI
Three months
ended 3/31/2014
Annualized
(Unaudited)
Diversified Portfolio
Office
$2,055
$8,220
2,999
11,996
623
2,492
$5,677
$22,708
Office(2)
$2,007
$8,028
Retail (2)
1,251
5,004
988
3,952
Total Virginia Beach Town Center NOI
$4,246
$16,984
Total Stabilized Portfolio NOI
$9,923
$39,692
Retail
Multifamily (1)
Total Diversified Portfolio NOI
Virginia Beach Town Center
Multifamily
(1) Excludes Liberty Apartments
(2) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes totaling ~$210K per quarter
34
2) Understanding AHH –Identified &
Next Generation Pipeline
$ in thousands, unaudited
Note: The data below reflects the Company’s current estimates and projections, which may change as a result of various
factors. The Company can make no assurances that the estimates and projections below will actually be realized.
Identified Pipeline
Next Generation Pipeline
Liberty Apartments
Estimated Stabilized Value/Weighted Average
Estimated
Return on
Cost
Projected
Value Spread
The Company's
Estimated Equity
Creation
The Company's Est.
Equity Creation
Excluding JV
Ownership
Estimated Cost
Estimated
Stabilized NOI
$139,000
$11,400
8.20%
125bp
$24,995
$23,903
150,000
12,400
8.27%
150bp
33,251
33,251
2,000
6.51%
$25,800
8.24%
30,700
$319,700
(1)
$58,246
$57,154
Greater than $57M in Equity Creation – 3 to 4 Years
(1) Purchase price
35
3) Understanding AHH – 3rd Party Construction
$ in thousands
Gross Profit - metric to use when evaluating the profitability and valuation of the general contracting & real
estate services segment
Gross Profit Summary
Q1 2014
(Unaudited)
Revenue
Expense
Gross Profit
$19,234
(17,985)
$1,249
Construction Company - Ongoing Profitable Business with Intrinsic Value
36
4) NAV Component Data
$ in thousands
Stabilized Portfolio NOI (Cash)
Development Pipeline
Annualized three
months ended
3/31/2014
Diversified Portfolio
Office
Retail
Multifamily
Total Diversified Portfolio NOI (pg. 34)
Development Investment as of 3/31/2014
The Company's Estimated Equity Creation - 3-4 years (pg. 35)
$8,220
11,996
2,492
$22,708
$78,536
58,246
$136,782
Operating Companies
Virginia Beach Town Center
Outlook
Office(1)
$8,028
Retail (1)
Multifamily
Total Virginia Beach Town Center NOI (pg. 34)
Stabilized Portfolio NOI (Cash)
5,004
3,952
$16,984
3/31/2014
General Contracting and Real Estate Services per
Company 2014 parameters (pg. 7)
$4,000
$39,692
Other Assets
Liabilities & Share Count
As of 3/31/2014
Other Assets
Cash and Cash Equivalents
Restricted Cash
Accounts Receivable
Construction receivables, including retentions
Other Assets
Total Other Assets
$13,444
2,754
18,884
12,736
25,799
$73,617
As of 3/31/2014
Liabilities
Mortgages and notes payable
Accounts payable and accrued liabilities
Construction payables, including retentions
Other Liabilities
Total Liabilities
Share Count
Weighted Average Common Shares Outstanding
Weighted Average Operating Partnership ("OP") Units Outstanding
Total Weighted Average Common shares and OP units outstanding
$317,271
7,158
27,047
16,264
$367,740
19,193
13,632
32,825
(1) Includes leases for space occupied by Armada Hoffler which are eliminated for GAAP purposes totaling ~$210K per quarter
37
Appendix –
Definitions & Reconciliations
Definitions
Net Operating Income:
We calculate Net Operating Income (“NOI”) as property revenues (base rent, expense reimbursements and other
revenue) less property expenses (rental expenses and real estate taxes). For our office, retail and multifamily
segments, NOI excludes general contracting and real estate services expenses, depreciation and amortization, general
and administrative expenses, and impairment charges. Other REITs may use different methodologies for calculating
NOI, and accordingly, our NOI may not be comparable to such other REITs’ NOI. NOI is not a measure of operating
income or cash flows from operating activities as measured by GAAP and is not indicative of cash available to fund cash
needs. As a result, net operating income should not be considered an alternative to cash flows as a measure of
liquidity. We consider NOI to be an appropriate supplemental measure to net income because it assists both investors
and management in understanding the core operations of our real estate business. (Reconciliation to GAAP located in
appendix pg. 45)
Funds From Operations:
We calculate Funds From Operations (“FFO”) in accordance with the standards established by the National Association
of Real Estate Investment Trusts (“NAREIT”). NAREIT defines FFO as net income (loss) (calculated in accordance with
accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales of
depreciable operating property, real estate related depreciation and amortization (excluding amortization of deferred
financing costs) and after adjustments for unconsolidated partnerships and joint ventures.
FFO is a supplemental non-GAAP financial measure. Management uses FFO as a supplemental performance measure
because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance.
Specifically, in excluding real estate related depreciation and amortization and gains and losses from property
dispositions, which do not relate to or are not indicative of operating performance, FFO provides a performance
measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs.
Other equity REITs may not calculate FFO in accordance with the NAREIT definition as we do, and, accordingly, our FFO
may not be comparable to such other REITs’ FFO.
39
Definitions
Core Funds From Operations:
We calculate Core Funds From Operations ("Core FFO") as FFO calculated in accordance with the standards established
by NAREIT, adjusted for losses on debt extinguishments, non-cash stock compensation and impairment charges. Such
items are non-recurring or non-cash in nature. Our calculation of Core FFO also excludes acquisition costs and the
impact of development pipeline projects that are still in lease-up. We generally consider a property to be in lease-up
until the earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after
the property receives its certificate of occupancy.
Management believes that the computation of FFO in accordance to NAREIT’s definition includes certain items that are
not indicative of the results provided by the Company’s operating portfolio and affect the comparability of the
Company’s period-over-period performance. Our calculation of Core FFO differs from NAREIT's definition of FFO. Other
equity REITs may not calculate Core FFO in the same manner as us, and, accordingly, our Core FFO may not be
comparable to other REITs' Core FFO.
Adjusted Funds From Operations:
We calculate Adjusted Funds From Operations (“AFFO”) as Core FFO, (i) excluding the impact of tenant improvement
and leasing commission costs, capital expenditures, the amortization of deferred financing fees, derivative (income)
loss, the net effect of straight-line rents and the amortization of lease incentives and net above (below) market rents
and (ii) adding back the impact of development pipeline projects that are still in lease-up and government development
grants that are not included in FFO.
Management believes that AFFO provides useful supplemental information to investors regarding our operating
performance as it provides a consistent comparison of our operating performance across time periods and allows
investors to more easily compare our operating results with other REITs. However, other REITs may use different
methodologies for calculating AFFO or similarly entitled FFO measures and, accordingly, our AFFO may not always be
comparable to AFFO or other similarly entitled FFO measures of other REITs.
40
Definitions
EBITDA:
We calculate EBITDA as net income (loss) (calculated in accordance with GAAP), excluding interest expense, income
taxes and depreciation and amortization. Management believes EBITDA is useful to investors in evaluating and
facilitating comparisons of our operating performance between periods and between REITs by removing the impact of
our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our
operating results.
Core EBITDA:
We calculate Core EBITDA as EBITDA, excluding certain items, including, but not limited to, non-recurring or
extraordinary gains (losses), early extinguishment of debt, derivative (income) losses, acquisition costs and the impact
of development pipeline projects that are still in lease-up. We generally consider a property to be in lease-up until the
earlier of (i) the quarter after which the property reaches 80% occupancy or (ii) the thirteenth quarter after the
property receives its certificate of occupancy. Management believes that Core EBITDA provides useful supplemental
information to investors regarding our ongoing operating performance as it provides a consistent comparison of our
operating performance across time periods and allows investors to more easily compare our operating results with other
REITs. However, other REITs may use different methodologies for calculating Core EBITDA or similarly entitled measures
and, accordingly, our Core EBITDA may not always be comparable to Core EBITDA or other similarly entitled measures
of other REITs.
Core Debt:
We calculate Core Debt as our total debt, excluding any construction loans associated with our development pipeline.
Same Store Portfolio:
We define same store properties as including those properties that were owned and operated for the entirety of the
period being presented and excluding properties that were in lease-up during the period present. We generally
consider a property to be in lease-up until the earlier of (i) the quarter after which the property reaches 80% occupancy
or (ii) the thirteenth quarter after the property receives its certificate of occupancy. The following table shows the
properties included in the same store and non-same store portfolio for the comparative periods presented.
41
Same Store vs. Non-Same Store Properties
Comparison of Three Months Ended
March 31, 2014 to 2013
Same Store
Non-Same Store
Office Properties
Armada Hoffler Tower
X
One Columbus
X
Two Columbus
X
Virginia Natural Gas
X
Richmond Tower
X
Oyster Point
X
Sentara Williamsburg
X
Retail Properties
Bermuda Crossroads
X
Broad Creek Shopping Center
X
Courthouse 7-Eleven
X
Gainsborough Square
X
Hanbury Village
X
North Point Center
X
Parkway Marketplace
X
Harrisonburg Regal
X
Dick’s at Town Center
X
249 Central Park Retail
X
Studio 56 Retail
X
Commerce Street Retail
X
Fountain Plaza Retail
X
South Retail
X
Tyre Neck Harris Teeter
X
Multifamily
Smith’s Landing
The Cosmopolitan
Liberty Apartments
X
X
X
42
Reconciliation to GAAP - Segment Portfolio NOI
$ in thousands
Three months ended 3/31
2014
2013
Office Same Store
Rental revenues (1)
Property expenses
NOI
Non-Same Store NOI
Segment NOI
$6,549
2,131
4,418
$4,418
$6,486
1,946
4,540
$4,540
Retail Same Store(2)
Rental revenues
Property expenses
NOI
Non-Same Store NOI
Segment NOI
$5,228
1,687
3,541
404
$3,945
$5,005
1,680
3,325
$3,325
Multifamily Same Store(3)
Rental revenues
Property expenses
NOI
Non-Same Store NOI
Segment NOI
$1,816
831
985
526
1,511
$1,907
815
1,092
1,092
$9,874
$8,957
Total Segment Portfolio NOI
(1) No assets excluded
(2) Bermuda Crossroads excluded
(3) Smith's Landing and Liberty Apartments excluded
43
Reconciliation to GAAP - Segment Portfolio NOI
$ in thousands
Three months ended 3/31/2014
Diversified Portfolio
Cash NOI
Net effect of straight-line rents
Amortization of lease incentives and (above) below market rents
GAAP NOI
Office
$2,055
248
(13)
$2,290
Retail
$2,999
(106)
39
$2,932
Multifamily
$623
(13)
(14)
$596
Total
$5,677
129
12
$5,818
Town Center of Virginia Beach
Cash NOI
Net effect of straight-line rents
Amortization of lease incentives and (above) below market rents
Elimination of AHH rent
GAAP NOI
Office
$2,007
287
(26)
(140)
$2,128
Retail
$1,251
(22)
(146)
(70)
$1,013
Multifamily
$988
(3)
$985
Total
$4,246
262
(172)
(210)
$4,126
GAAP NOI
Diversified Portfolio
Town Center of Virginia Beach
Unstabilized Properties
Total Segment Portfolio GAAP NOI
Office
$2,290
2,128
$4,418
Retail
$2,932
1,013
$3,945
Multifamily
$596
985
(70)
$1,511
Total
$5,818
4,126
(70)
$9,874
44
Reconciliation to GAAP - Segment Portfolio NOI
$ in thousands
Three months ended 3/31/2014
Office
Segment revenues
Segment expenses
$
Net operating income
$
Retail
Multifamily
Total Rental
General Contracting &
Properties
Real Estate Services
6,549 $
5,770 $
2,874 $
2,131
1,825
1,363
15,193
5,319
4,418 $
3,945 $
1,511 $
9,874
$
19,234
Total
$
34,427
23,304
$
11,123
17,985
$
1,249
Depreciation and amortization
General and administrative expenses
Interest expense
Other income (expense)
Income tax provision
Net income
(3,969)
(2,046)
(2,565)
112
(149)
$
2,506
45